Understanding the Model Tenancy Act of 2021

The Model Tenancy Act, by the Central Government seeks to cater to the loopholes in the current system of ‘Rent Control’ within various States. This centralised system of Rent Control seeks to institutionalize rental housing while safeguarding the interests of both the parties, the tenants and the landlords.

Its history dates back to the first Rent Control Act in 1948, which had been viewed as extremely stringent, which led to the passing of the Rent Control Act 1992. This revised version, looked to provide the accurate valuation of rental properties, yet there existed legal inconsistency in the execution of the same, which is why the Model Tenancy Act 2021 has been formulated.

The Model Tenancy Act briefly seeks to provide for the rights and obligations of the landlords and tenants, effective regulatory mechanism and system for dispute resolution.

Tenancy Agreement: The Act provides for a written tenancy Agreement which is extensive and clearly elucidated between the parties. The Parties to the Agreement are the Landlord; who receives/ entitled to receive rent, and the Tenant; the person by whom or on whose account or whose behalf the rent of the premises the rent is payable to the landlord. Such an Agreement must be informed to the Rent Authority within 2 months from Tenancy Agreement. Both the Time Period and the Rent payable is determined as per the decided terms of the Tenancy Agreement subject to alterations upon the consent of both the parties. In case of a dispute between both the Parties with respect to the ‘Rent’ an application shall be made to the Rent Authority who shall determine the revised rent between the parties.

Additionally, a Supplementary Agreement shall exclusively allow for subletting the whole or a part of the premises and shall allow for the transfer/assignment of rights of the Tenancy Agreement.

Security deposit: A security deposit shall be payable by the tenant to the landlord as per the Tenancy Agreement however the same mustn’t exceed two months’ rent in case of residential premises and six months in case of non-residential premises. The same deposit shall be refunded to the tenant on the transfer of the premises back to the Landlord after making the necessary deductions of the liability of the tenant.

In case of a dispute the act provides for, Rent Authorities to decide matters on first instance. In case the Parties are unhappy/aggrieved by the order by the Rent Authority an Appeal shall be made to the Rent Court having territorial jurisdiction. The Model Tenancy Act seeks to provide a speedy and transparent system for disposal of disputes. In order to carry out the provisions of the Act the State Government/Union Territory shall be authorised to makes rules for the same.